Question

Thomas purchased 200 shares of stock A for ​$23 a share and sold them more than a year later for $ 19 per share. Be purchased 600 shares of stock B for ​$41 per share and sold them for ​$57 per share after holding them for more than a year. Both of the sales were in the same year. If Thomas is in a 35​% tax​ bracket, what will his capital gains tax be for the​ year

Answer 1

Answer:

Capital gain tax = $1,540.

Explanation:

As per the data given in the question,

For stocks of A  

Profit = (selling price - purchasing price) × units

= ($19 - $23) × 200

= -$800

For stocks of B  

Profit = ($57-$41) × 600

= $9,600

Total profit = profit for stock A + profit for stock B  

= -$800 + $9,600

= $8,800

Therefore, capital gain for both year = $8,800

Tax rate = 35%

Capital gain tax = Capital gain × Tax rate

= $8,800 × 35%

=$3,080

As share holds for more than a year,

So, Capital gain tax = $3,080 ÷ 2 = $1,540.